London open: Stocks inch higher on trade hopes, May faces leadership challenge
London stocks edged higher in early trade on Wednesday, taking their cue from an upbeat Asian session as investors grew increasingly optimistic about Sino-US trade relations, even as Theresa May faced a leadership challenge.
At 0830 GMT, the FTSE 100 was up 0.3% at 6,829.86, while the pound remained at recent lows, but was up 0.4% against the dollar and the euro at 1.2538 and 1.1076, respectively, as it emerged that Prime Minister Theresa May will face a vote of no confidence in her leadership later in the day.
Voting is expected to take place between 1800 GMT and 2000 GMT, after the required 48 letters from Tory MPs calling for a contest were delivered. If May loses the vote, there will be a Conservative leadership contest in which she cannot stand. If she wins, however, her leadership cannot be challenged for at least another year.
Neil Wilson, chief market analyst at Markets.com, said: "The question for the pound is not who the leader is per se, but what it means for Brexit. A new Tory leader, depending on who it is and what Parliamentary support he or she can command, could create the necessary conditions for a new General Election, a situation that would undoubtedly ramp up the political risk premium for UK assets."
More broadly, sentiment was being was underpinned by reports that China has agreed to cut tariffs on US cars from 40% to 15% in a move aimed at de-escalating the trade war between it and the US. The mood was also lifted by news that Huawei's chief financial officer, Meng Wanzhou, was released on bail.
In corporate news, aerospace company Rolls-Royce rallied after saying it was still implementing its contingency plans after the UK government pulled its vote on the Brexit withdrawal agreement. The group also confirmed its 2018 full year forecasts with both group and core profit and cash flow to be in the upper half of its full year guidance range.
British American Tobacco was in the green as it backed its 2018 earnings guidance and said de-leveraging remains on track.
Hard landscaping products manufacturer Marshalls was on the front foot as it announced the acquisition of concrete brick manufacturer Edenhall for up to £17.2m as it said it expects to exceed full-year expectations thanks to better second-half revenue growth.
Indivior gained ground after some better news from the US courts in its battle with generic drug maker Dr Reddy's over its opioid addiction treatment Suboxone.
On the downside, Sainsbury's was in the red as it and Asda asked the competition authorities for more time to argue the case for their proposed £12bn merger. After having received a "large amount of material" from the Competition & Markets Authority, likely referring to rival supermarkets' objections to the deal, the pair has lodged an appeal to be given 11 extra working days over the Christmas period to prepare their response.
Wood Group retreated even as it said it expects full-year earnings before interest, tax and amortisation to be in line with August guidance and market expectations, at between $620m and $630m.
Superdry was under the cosh as the fashion retailer warned on profits, pinning the blame on unseasonably warm weather again as it posted a 49% drop in underlying interim pre-tax profit. The group said it now expects underlying pre-tax profit for the year to be between £55m and £70m, versus consensus expectations of £84m.
Dixons Carphone tumbled as it said it swung to a £440m loss in the first half as it booked £490m of exceptional charges.
Market Movers
FTSE 100 (UKX) 6,829.86 0.34%
FTSE 250 (MCX) 17,650.82 -0.01%
techMARK (TASX) 3,359.19 0.13%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 812.80p 4.10%
BHP Group (BHP) 1,592.40p 1.97%
British American Tobacco (BATS) 2,770.00p 1.65%
HSBC Holdings (HSBA) 652.70p 1.30%
Imperial Brands (IMB) 2,431.00p 1.25%
Unilever (ULVR) 4,366.50p 1.24%
Shire Plc (SHP) 4,559.50p 1.19%
Pearson (PSON) 933.80p 1.17%
Micro Focus International (MCRO) 1,491.00p 1.12%
Bunzl (BNZL) 2,380.00p 1.02%
FTSE 100 - Fallers
Wood Group (John) (WG.) 619.80p -3.79%
Sainsbury (J) (SBRY) 286.90p -3.21%
GVC Holdings (GVC) 630.00p -1.95%
Barratt Developments (BDEV) 440.40p -1.52%
Barclays (BARC) 151.86p -1.42%
easyJet (EZJ) 1,050.00p -1.41%
Next (NXT) 4,557.00p -1.36%
ITV (ITV) 127.15p -1.36%
CRH (CRH) 2,005.00p -1.33%
Fresnillo (FRES) 803.00p -1.28%
FTSE 250 - Risers
Marshalls (MSLH) 435.00p 4.37%
Vivo Energy (VVO) 116.75p 4.24%
Spirent Communications (SPT) 120.00p 3.99%
FDM Group (Holdings) (FDM) 793.00p 3.80%
Indivior (INDV) 87.84p 3.58%
Bank of Georgia Group (BGEO) 1,389.60p 2.93%
JPMorgan Indian Investment Trust (JII) 666.20p 2.33%
RHI Magnesita N.V. (DI) (RHIM) 3,422.00p 2.09%
Fidelity China Special Situations (FCSS) 200.50p 2.09%
Hastings Group Holdings (HSTG) 179.90p 2.04%
FTSE 250 - Fallers
Superdry (SDRY) 465.43p -18.84%
Dixons Carphone (DC.) 131.08p -13.19%
Man Group (EMG) 130.90p -4.97%
Energean Oil & Gas (ENOG) 547.00p -3.70%
Metro Bank (MTRO) 1,827.00p -3.69%
Just Group (JUST) 91.15p -3.39%
Jupiter Fund Management (JUP) 283.40p -3.31%
Kaz Minerals (KAZ) 531.80p -3.20%
Redrow (RDW) 464.60p -1.82%
Cairn Energy (CNE) 155.20p -1.46%